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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, Millions of Dollars Except Per Share Amounts)
THIRD QUARTER | YEAR TO DATE | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
NET SALES | $ | 1,012.7 | $ | 834.9 | $ | 2,999.3 | $ | 2,445.9 | ||||||||
COSTS AND EXPENSES | ||||||||||||||||
Cost of sales | 634.9 | 530.6 | 1,912.9 | 1,553.9 | ||||||||||||
Selling, general and administrative | 231.9 | 179.1 | 715.3 | 551.9 | ||||||||||||
Interest-net | 16.5 | 8.1 | 49.5 | 23.9 | ||||||||||||
Other-net | 15.4 | 12.6 | 45.6 | 34.1 | ||||||||||||
Restructuring charges | 0.9 | 2.3 | 10.0 | 3.9 | ||||||||||||
899.6 | 732.7 | 2,733.3 | 2,167.7 | |||||||||||||
EARNINGS FROM CONTINUING OPERATIONS | ||||||||||||||||
BEFORE INCOME TAXES | 113.1 | 102.2 | 266.0 | 278.2 | ||||||||||||
Income taxes | 22.9 | 25.8 | 62.3 | 70.7 | ||||||||||||
NET EARNINGS FROM CONTINUING OPERATIONS | 90.2 | 76.4 | 203.7 | 207.5 | ||||||||||||
Earnings (loss) from discontinued operations (including loss | ||||||||||||||||
on disposal of $1.5 million in 2006) before income taxes | 0.5 | 0.4 | (1.0 | ) | 2.6 | |||||||||||
Income taxes (tax benefit) on discontinued operations | 0.2 | (0.1 | ) | (0.2 | ) | 0.7 | ||||||||||
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS | 0.3 | 0.5 | (0.8 | ) | 1.9 | |||||||||||
NET EARNINGS | $ | 90.5 | $ | 76.9 | $ | 202.9 | $ | 209.4 | ||||||||
BASIC EARNINGS PER SHARE OF COMMON STOCK | ||||||||||||||||
Continuing operations | $ | 1.11 | $ | 0.92 | $ | 2.49 | $ | 2.50 | ||||||||
Discontinued operations | — | — | (0.01 | ) | 0.02 | |||||||||||
Total basic earnings per share of common stock | $ | 1.11 | $ | 0.92 | $ | 2.48 | $ | 2.52 | ||||||||
DILUTED EARNINGS PER SHARE OF COMMON STOCK | ||||||||||||||||
Continuing operations | $ | 1.09 | $ | 0.89 | $ | 2.43 | $ | 2.43 | ||||||||
Discontinued operations | — | — | (0.01 | ) | 0.02 | |||||||||||
Total diluted earnings per share of common stock | $ | 1.09 | $ | 0.90 | $ | 2.43 | $ | 2.46 | ||||||||
DIVIDENDS PER SHARE | $ | 0.30 | $ | 0.29 | $ | 0.88 | $ | 0.85 | ||||||||
AVERAGE SHARES OUTSTANDING (in thousands) | ||||||||||||||||
Basic | 81,206 | 83,566 | 81,853 | 83,160 | ||||||||||||
Diluted | 82,867 | 85,483 | 83,669 | 85,242 | ||||||||||||
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THE STANLEY WORKS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Millions of Dollars)
September 30, 2006 | December 31, 2005 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 241.3 | $ | 657.8 | ||||
Accounts and notes receivable | 763.8 | 609.6 | ||||||
Inventories | 619.2 | 460.7 | ||||||
Other current assets | 98.7 | 84.2 | ||||||
Assets held for sale | 2.5 | 13.3 | ||||||
Total current assets | 1,725.5 | 1,825.6 | ||||||
Property, plant and equipment | 498.0 | 467.1 | ||||||
Goodwill and other intangibles | 1,612.2 | 1,060.4 | ||||||
Other assets | 202.2 | 192.0 | ||||||
Total assets | $ | 4,037.9 | $ | 3,545.1 | ||||
LIABILITIES AND SHAREOWNERS’ EQUITY | ||||||||
Short-term borrowings | $ | 322.4 | $ | 170.2 | ||||
Accounts payable | 434.8 | 327.7 | ||||||
Accrued expenses | 507.8 | 374.3 | ||||||
Liabilities held for sale | — | 3.1 | ||||||
Total current liabilities | 1,265.0 | 875.3 | ||||||
Long-term debt | 823.3 | 895.3 | ||||||
Other long-term liabilities | 426.5 | 329.6 | ||||||
Shareowners’ equity | 1,523.1 | 1,444.9 | ||||||
Total liabilities and equity | $ | 4,037.9 | $ | 3,545.1 | ||||
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THE STANLEY WORKS AND SUBSIDIARIES
SUMMARY OF CASH FLOW ACTIVITY
(Unaudited, Millions of Dollars)
THIRD QUARTER | YEAR TO DATE | |||||||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net earnings | $ | 90.5 | $ | 76.9 | $ | 202.9 | $ | 209.4 | ||||||||||||
Depreciation and amortization | 30.0 | 23.4 | 91.3 | 70.7 | ||||||||||||||||
Changes in working capital | (43.5 | ) | (45.2 | ) | (42.0 | ) | (70.6 | ) | ||||||||||||
Other | 40.3 | 19.5 | 67.6 | 2.8 | ||||||||||||||||
Net cash provided by operating activities | 117.3 | 74.6 | 319.8 | 212.3 | ||||||||||||||||
INVESTING AND FINANCING ACTIVITIES | ||||||||||||||||||||
Capital and software expenditures | (21.2 | ) | (17.0 | ) | (59.8 | ) | (44.0 | ) | ||||||||||||
Proceeds (taxes paid) from sale of business | — | (1.9 | ) | 0.9 | (20.6 | ) | ||||||||||||||
Business acquisitions and asset disposals | (24.4 | ) | (2.3 | ) | (540.2 | ) | (108.4 | ) | ||||||||||||
Cash dividends on common stock | (24.3 | ) | (24.2 | ) | (71.6 | ) | (70.6 | ) | ||||||||||||
Other | (13.2 | ) | (16.7 | ) | (65.6 | ) | 119.4 | |||||||||||||
Net cash used in investing and financing activities | (83.1 | ) | (62.1 | ) | (736.3 | ) | (124.2 | ) | ||||||||||||
Increase(Decrease) in Cash and Cash Equivalents | 34.2 | 12.5 | (416.5 | ) | 88.1 | |||||||||||||||
Cash and Cash Equivalents, Beginning of Period | 207.1 | 325.6 | 657.8 | 250.0 | ||||||||||||||||
Cash and Cash Equivalents, End of Period | $ | 241.3 | $ | 338.1 | $ | 241.3 | $ | 338.1 | ||||||||||||
Free Cash Flow Computation | ||||||||||||||||||||
Operating Cash Flow | $ | 117.3 | $ | 74.6 | $ | 319.8 | $ | 212.3 | ||||||||||||
Less: capital and software expenditures | (21.2 | ) | (17.0 | ) | (59.8 | ) | (44.0 | ) | ||||||||||||
Free Cash Flow (before dividends) | $ | 96.1 | $ | 57.6 | $ | 260.0 | $ | 168.3 | ||||||||||||
Free cash flow is defined as cash flow from operations less capital expenditures; the company believes this is an important measure of its liquidity, as well as its ability to fund future growth and to provide a return to the shareowners.
The change in working capital is comprised of accounts receivable, inventory and accounts payable.
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THE STANLEY WORKS AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(Unaudited, Millions of Dollars)
THIRD QUARTER | YEAR TO DATE | |||||||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||||||
NET SALES | ||||||||||||||||||||
Consumer Products | $ | 347.9 | $ | 289.8 | $ | 989.4 | $ | 808.3 | ||||||||||||
Industrial Tools | 432.8 | 332.7 | 1,346.4 | 1,030.1 | ||||||||||||||||
Security Solutions | 232.0 | 212.4 | 663.5 | 607.5 | ||||||||||||||||
Total | $ | 1,012.7 | $ | 834.9 | $ | 2,999.3 | $ | 2,445.9 | ||||||||||||
OPERATING PROFIT | ||||||||||||||||||||
Consumer Products | $ | 64.0 | $ | 57.0 | $ | 152.0 | $ | 140.0 | ||||||||||||
Industrial Tools | 41.6 | 29.8 | 115.6 | 104.6 | ||||||||||||||||
Security Solutions | 40.3 | 38.4 | 103.5 | 95.5 | ||||||||||||||||
Total | $ | 145.9 | $ | 125.2 | $ | 371.1 | $ | 340.1 | ||||||||||||
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